Judge Begins 1st Hearing on Detroit’s Bankruptcy

DETROIT (AP) — Lawyers jammed a courtroom Wednesday for the first hearing in Detroit’s bankruptcy case, as a judge set out to decide whether anxious city retirees can slow down the process with lawsuits in other courts.

Detroit is the largest U.S. city to file for bankruptcy protection. U.S. Bankruptcy Judge Steven Rhodes was not expected to dive into any numbers during the first hearing, but he may settle a dispute that looms as a big threat to the reorganization.

The city wants Rhodes to put a stop to lawsuits that aim to halt the bankruptcy process, especially after an Ingham County judge last week said state officials ignored the constitution and acted illegally in approving the Chapter 9 filing. Those cases remain alive, although the Michigan appeals court temporarily stopped any further proceedings Tuesday.

Sharon Levine, an attorney for a union that represents city workers, urged Rhodes to let those lawsuits run their course. She said there’s no federal insurance for public pensions once they’re broken, unlike pensions at private employers.

“Our members who participate at most are at or below $19,000 a year. There is no safety net,” Levine said.

The Michigan Constitution states public pensions “shall not be diminished or impaired.”

Pension payments have not been frozen or reduced in the bankruptcy process.